San Gold Provides Update on Rice Lake Activities: Resource Estimation, Mine Development and Production, Guidance and

San Gold Provides Update on Rice Lake Activities: Resource Estimation, Mine
Development and Production, Guidance and Exploration
WINNIPEG, MANITOBA -- (Marketwire) -- 02/08/13 -- San Gold
Corporation (the "Company") (TSX:SGR)(OTCQX:SGRCF) announces an
updated mineral resource and mineral reserve estimate, 2012
production results with guidance for 2013 & 2014 and an exploration
update for the Company's 100% owned Rice Lake Mining Complex (the
"Property") located in Bissett, approximately 235 kilometres
northeast of Winnipeg, Manitoba, Canada. The Property has a
permitted, modern gold mill currently processing ore at a capacity of
2,500 tons per day, as well as modern surface infrastructure,
including a licensed tailings management facility and is connected to
the Manitoba power grid system.
Highlights
-- Proven and Probable mineral reserves of 253,000 ounces, an increase of
21% from March 31, 2012 (an increase of 75% after accounting for mined
ounces).
-- Measured and Indicated mineral resources of 655,000 ounces, an increase
of 17% from March 31, 2012 (an increase of 32% after accounting for
mined ounces).
-- Highest ever production in 2012 of 86,506 ounces of gold, an increase of
17% over 2011.
-- Milling capacity was significantly increased during the year to 2,500
tons per day from 2,000 tons.
-- Continued exploration success along the depth extension of the 007 zone
that returned 12.6 g/t gold over 6.0 metres and 15.5 g/t gold over 11.1
metres.
Development Outlook for 2013
The objective of the development program, from 2013 onwards, is to
increase mine production to match the current mill capacity.
Development will take place within the Property in four main areas,
on 26 Level, 16 Level, A-Shaft of the Rice Lake mine and within other
active mining areas of the 007, Hinge, Cohiba and L13 deposits.
(refer to Figures 1&2 on projected timelines)
-- On 26 Level of the Rice Lake mine, the Company is driving a 150 metre
drift, to begin definition drilling of the 007 deposit, and a 300 metre
access drift to allow mining of the 710 deposit. Mining in this region
is targeted to begin in early 2014.
-- On 16 Level of the Rice lake mine, the Company is constructing a new A-
Shaft ore handling system and 1,200 metres of tracked haulage drifts to
access the Hinge district from 720 metres below surface. Development
work will continue in 2014 to access the 007 deposit. Mining is targeted
to begin in early 2014 in the Hinge district, with operations commencing
in the 007 deposit later in the year.
-- A-Shaft is being reconfigured with new ropes, guides, drum, and skips in
anticipation of increased production from the 16 and 26 levels. Once
complete, A-Shaft is expected to have up to 2,500 tpd capacity from 26
Level and 3,000 tpd capacity from 16 Level.
-- Within the active mining regions, the Company is planning 6,800 metres
of development to provide access for mining operations, drill stations,
services, and ventilation.
Once the development is complete, the operations team will have
access to multiple faces, which will lead to significantly higher
production rates and lower cash costs per ounce.
2012 Preliminary Operating Results
The Company is also pleased to announce highest ever production in
2012 of 86,506 ounces of gold with approximately 16,370 tons of ore
remaining in surface stockpiles at year end. Overall, the Company
produced 17% more gold in 2012 compared with the 74,280 ounces of
gold produced in 2011. Production levels decreased marginally during
the fourth quarter and lower than planned grades were realized in
several stoping blocks at the 007 mine. Additionally, grades were
lower due to an increased focus during the quarter on ore development
work.
Gold production was 19,019 ounces during the fourth quarter resulting
in gold production of 86,506 ounces for the year. For the quarter,
168,088 tons were milled resulting in a total of 629,279 tons for the
year. 171,351 tons were mined during the quarter resulting in a total
of 615,142 tons mined for the year. Average feed grade during the
quarter was 4.22 grams per tonne gold (0.123 opt) resulting in an
average feed grade of approximately 5.07 grams per tonne gold (0.148
opt) for the year. Mill recovery during the quarter was 92.6%
resulting in an average recovery of 93.1% for the year.
MINERAL RESOURCE AND RESERVE ESTIMATE
The following table provides a detailed summary of the Company's
mineral resources and mineral reserves, as of December 31, 2012. A
detailed technical report has been filed on SEDAR.
----------------------------------------------------------------------------
Mineral Reserves
----------------------------------------------------------------------------
Tons Gold Grade Insitu
oz/ton (g/tonne) ounces
----------------------------------------------------------------------------
Rice Lake Mine
Proven Reserves 47,400 0.20 (6.90) 9,500
Probable Reserves 327,300 0.18 (6.26) 59,800
Proven and Probable 374,700 0.18 (6.34) 69,300
----------------------------------------------------------------------------
Hinge District
Proven Reserves 37,800 0.14 (4.87) 5,400
Probable Reserves 344,800 0.11 (3.78) 38,000
Proven and Probable 382,600 0.11 (3.88) 43,400
----------------------------------------------------------------------------
007 Zone
Proven Reserves 254,200 0.18 (6.24) 46,200
Probable Reserves 478,800 0.13 (4.58) 63,900
Proven and Probable 733,000 0.15 (5.15) 110,100
----------------------------------------------------------------------------
Hanging Wall Zones (Cohiba, Cartwright L13)
Proven Reserves 37,600 0.14 (4.69) 5,200
Probable Reserves 171,200 0.14 (4.93) 24,600
Proven and Probable 208,800 0.14 (4.89) 29,800
----------------------------------------------------------------------------
Normandy Shear (SG1, SG2, SG3)
Proven Reserves - - - -
Probable Reserves - - - -
Proven and Probable - - - -
----------------------------------------------------------------------------
Total Project
Proven and Probable 1,699,200 0.15 (5.10) 252,600
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Mineral Resources
----------------------------------------------------------------------------
Tons Gold Grade Insitu
oz/ton (g/tonne) ounces
Rice Lake Mine
Measured Resource 226,300 0.24 (8.21) 54,200
Indicated Resource 770,200 0.24 (8.07) 181,200
Measured and Indicated 996,500 0.24 (8.10) 235,400
Inferred Resource 1,709,800 0.29 (9.80) 488,500
----------------------------------------------------------------------------
Hinge District
Measured Resource 96,200 0.16 (5.65) 15,900
Indicated Resource 480,900 0.13 (4.50) 63,000
Measured and Indicated 577,100 0.14 (4.69) 78,900
Inferred Resource 1,564,300 0.13 (4.48) 204,500
----------------------------------------------------------------------------
007 Zone
Measured Resource 225,000 0.24 (8.18) 53,700
Indicated Resource 868,800 0.15 (5.11) 129,600
Measured and Indicated 1,093,800 0.17 (5.75) 183,300
Inferred Resource 8,513,300 0.14 (4.89) 1,214,700
----------------------------------------------------------------------------
Hanging Wall Zones (Cohiba, Cartwright L13)
Measured Resource 39,100 0.16 (5.57) 6,400
Indicated Resource 336,100 0.19 (6.55) 64,200
Measured and Indicated 375,200 0.19 (6.45) 70,600
Inferred Resource 3,508,900 0.19 (6.64) 679,700
----------------------------------------------------------------------------
Normandy Shear (SG1, SG2, SG3)
Measured Resource - - - -
Indicated Resource 387,300 0.22 (7.70) 86,900
Measured and Indicated 387,300 0.22 (7.70) 86,900
Inferred Resource 1,220,800 0.22 (7.44) 265,000
----------------------------------------------------------------------------
Total Project
Measured and Indicated 3,429,900 0.19 (6.55) 655,100
Inferred Resource 16,517,100 0.17 (5.92) 2,852,500
----------------------------------------------------------------------------
NOTES TO MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE TABLE:
-- Mineral resource and mineral reserve estimates are in accordance with
the CIM Definition Standards on Mineral Resources and Mineral Reserves
adopted by CIM Council, 2010.
-- Tonnage and in situ ounce estimates have been rounded to the nearest
hundred.
-- Proven and probable mineral reserves are included in the measured and
indicated mineral resources.
-- The mineral reserve estimate is based on a 2.7m (9ft.) minimum mining
width, a SG 2.7 to 2.8 (tonnage factor of 11.4 ft3/ton), a gold price of
US$1,300 - US$1,500 per ounce (100% exchange) and a 93% mill recovery.
-- A 3.55-4.09 g/tonne (0.10-0.12 ounce/ton) cut-off grade has been applied
to deposits accessed from the Rice Lake mine shaft, while a 3.00-3.47
g/tonne (0.09-0.10 ounce/ton) cut-off grade has been applied to deposits
accessed via the Hinge/007 ramp.
-- Assays were capped at 102.9 g/tonne (3.0 ounces/ton) for drill holes and
chip samples.
-- Inferred mineral resources are not in the current mine plan and
therefore do not have demonstrated economic viability.
-- The mineral resource and mineral reserve estimate as of December 31,
2012 was prepared under the supervision of Dale Ginn, P.Geo., and
Michael Michaud, P.Geo., Qualified Persons within the meaning of
National Instrument 43-101.
-- The data in this table was prepared by the Company's geology and
engineering teams led by: Chief Geologist, Doug Berthelsen (P.Geo);
Chief Engineer, Joe Hunter (P.Eng); Senior Resource Geologist, Shawn
Horte and Resource Geologist, Jonna Deutscher.
Outlook
The Company is providing preliminary guidance of between 85,000 to
95,000 ounces of gold with cash costs of under $800 an ounce for
2013; 95,000 to 105,000 ounces of gold for 2014 and 105,000 to
115,000 ounces of gold for 2015. The Company continues to focus on
its higher margin, near surface mines with minimal production from
its Rice Lake mine where development activities are taking
precedence. The Rice Lake mine is scheduled to recommence normal
production levels in late 2014 to early 2015; when it is expected to
become an important contributor to production growth. Historically,
the Rice Lake mine has accounted for 20% of overall production. The
Company is forecasting annual capital development costs in the range
of $45-$55 million for the years 2013 and 2014.
"2013 will mark another significant step forward in the evolution of
the Rice Lake Mining Complex by extending operational access beneath
the current mining areas at the 007 and Hinge mines, which have
combined resources capable of sustaining production for the next ten
to fifteen years. This development will provide the drill platforms
we need to increase mineral reserves for long-term mine planning and
will also provide access for continued exploration of targets located
along strike from known deposits at depth. We continue to be excited
about the resource potential at depth as recent drill results below
26 Level confirms continuity of the geological structures," said San
Gold President and
Chief Executive Officer, George Pirie.
2013 Exploration Program
Exploration activities in 2013 will continue to focus on definition
and extension at the known zones and exploration drilling at other
advanced targets on the mineral lease and in the surrounding Rice
Lake area with a planned budget of $17 million that includes
approximately 130,000 metres of core drilling. The highlights of the
2013 exploration program are as follows:
-- Surface drilling at the Normandy Creek, SG1 and SG3 zones located east
of the 007 zone to better define the mineral resource and possible
extensions that have the potential to add to the current mineral
resource base and provide incremental feed to the mill at some future
time;
-- Continue to refine geologic model and complete follow-up exploration on
recent drill results from the 710 lens of the 007 zone near the 26 level
that returned 12.6 g/t gold over 6.0 metres and 15.5 g/t gold over 11.1
metres (see press release dated November, 26, 2012) that indicates that
zone extends up and down dip considerable distances and there remains
many isolated drill intersections that require follow-up drilling;
-- Surface drilling at more conceptual property and regional-scale targets,
in particular in areas where east-west trending shear zones intersect
more mafic volcanics and gabbroic rocks that are known to host the
majority of the gold mineralization at the Rice Lake mine and 007 mine,
and where limited drilling has returned anomalous gold values;
-- Commence initial regional surveys and first phase of drilling at the
recently acquired Atikwa Lake project (recently purchased from Opawica
Explorations Inc. - see press release dated June 19, 2012), where 2011
drilling returned 309 metres grading 0.59 g/t gold; and
-- Continue to support SGX Resources Inc. (31.5% ownership) that has
experienced exploration success at their Timmins South - Edleston Zone
(high-grade underground and open pit potential) and Timmins North -
Tully Township (established mineral resources and remains open in all
directions).
The Company currently has five drills operating at the Rice Lake
Mining Complex and will be providing drilling results from these
exciting projects throughout the year.
About San Gold
San Gold is an established Canadian gold producer, explorer, and
developer that owns and operates the Hinge, 007, and Rice Lake mines
near Bissett, Manitoba, approximately 235 kilometres northeast of
Winnipeg, Manitoba, Canada. The Rice Lake Project has a permitted,
modern gold mill currently processing ore at a capacity of 2,500 tons
per day, modern surface infrastructure including a licensed tailings
management facility, and is connected to the Manitoba power grid
system. The Company employs more than 400 people and is committed to
the highest standards of safety and environmental stewardship. San
Gold is on the Toronto Stock Exchange under the symbol "SGR" and on
the OTCQX under the symbol "SGRCF".
Dale Ginn, P.Geo., the Qualified Person for San Gold under National
Instrument 43-10, has reviewed and approved the press release.
For further information on the Company, please visit www.sangold.ca.
Cautionary Note
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein. This news release includes certain "forward-looking
statements". All statements, other than statements of historical fact
included in this release, including, without limitation, statements
regarding forecast gold production, gold grades, recoveries, cash
operating costs, potential mineralization, mineral resources, mineral
reserves, exploration results, and future plans and objectives of the
Company, are forward-looking statements that involve various risks
and uncertainties. These forward-looking statements include, but are
not limited to, statements with respect to mining and processing of
mined ore, achieving projected recovery rates, anticipated production
rates and mine life, operating efficiencies, costs and expenditures,
changes in mineral resources and conversion of mineral resources to
proven and probable mineral reserves, and other
information that is
based on forecasts of future operational or financial results,
estimates of amounts not yet determinable and assumptions of
management.
Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always,
using words or phrases such as "expects" or "does not expect", "is
expected", "anticipates" or "does not anticipate", "plans",
"estimates" or "intends", or stating that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur or
be achieved) are not statements of historical fact and may be
"forward-looking statements." Forward-looking statements are subject
to a variety of risks and uncertainties that could cause actual
events or results to differ from those reflected in the
forward-looking statements.
There can be no assurance that forward-looking statements will prove
to be accurate and actual results and future events could differ
materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from the
Company's expectations include, among others, the actual results of
current exploration activities, conclusions of economic evaluations
and changes in project parameters as plans continue to be refined as
well as future prices of precious metals, as well as those factors
discussed in the section entitled "Other MD&A Requirements and
Additional Disclosure and Risk Factors" in the Company's most recent
quarterly Management's Analysis and Discussion ("MD&A"). Although the
Company has attempted to identify important factors that could cause
actual results to differ materially, there may be other factors that
cause results not to be as anticipated, estimated or intended. There
can be no assurance that such statements will prove to be accurate as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements.
Exploration results that include geophysics, sampling, and drill
results on wide spacings may not be indicative of the occurrence of a
mineral deposit. Such results do not provide assurance that further
work will establish sufficient grade, continuity, metallurgical
characteristics, and economic potential to be classed as a category
of mineral resource. A mineral resource that is classified as
"inferred" or "indicated" has a great amount of uncertainty as to its
existence and economic and legal feasibility. It cannot be assumed
that any or part of an "indicated mineral resource" or "inferred
mineral resource" will ever be upgraded to a higher category of
resource. Investors are cautioned not to assume that all or any part
of mineral deposits in these categories will ever be converted into
proven and probable reserves.
To view figure 1, please visit the following link:
http://media3.marketwire.com/docs/SGRfig1.pdf
To view figure 2, please visit the following link:
http://media3.marketwire.com/docs/SGRfig2.pdf
Contacts:
San Gold Corporation
Dale Ginn, P.Geo
Qualified Person and Executive Vice Chairman
Toll Free: 1 (855) 585-4653
info1@sangold.ca
San Gold Corporation
George Pirie
President and CEO
Toll Free: 1 (855) 585-4653
info1@sangold.ca
San Gold Corporation
Manish Grigo
Director Investor Relations
Toll Free: 1 (855) 585-4653
info1@sangold.ca
www.sangold.ca